WEEKLY: Chinese alumina prices rise on bauxite supply risks, tight alumina availability

According to Mysteel's assessment, the weighted national average spot price for smelter-grade alumina with a minimum purity of 98.6% was at Yuan 2,730/tonne ($404/t) on June 11, up by 1% on week.

The firmer spot prices were largely driven by market anticipation that Guinea would this month announce measures to restrict bauxite exports. The expected curbs also lent support to the futures market. On June 11, the most-traded September alumina contract on the Shanghai Futures Exchange closed the daytime session at Yuan 2,899/t, marking a 5% increase from a week earlier.

In addition, tight alumina availability in certain regional markets such as the Guangxi autonomous region also underpinned prices, as alumina production cuts made previously have not been relaxed and newly commissioned capacity has yet to translate into spot availability.

During the week, domestic alumina output remained broadly stable. The 44 alumina refiners tracked by Mysteel produced 1.8 million tonnes over June 5-11, up by a marginal 0.1% from a week earlier, according to Mysteel's weekly survey.

Meanwhile, the widening spread between spot and futures prices dampened trading activity, contributing to rising inventories at delivery warehouses, market watchers said. 

Overall inventory levels continued to build, albeit at a slower pace. As of June 11, total alumina stocks across China's ten ports, 44 alumina producers, 89 primary aluminum smelters, and rail yards or in transit had reached 6.2 million tonnes, up 0.3% on week, slightly below the 0.4% growth recorded in the prior week.

Written by Iris Pang, pangjunyu@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com